We need to go beyond business as usual powered by AI

We need to go beyond business as usual powered by AI

We need to go beyond business as usual powered by AI

Does it happen to you to go into a new situation and have flashbacks like “I’ve been here before, doing this”? Today we hear sentences like: “data is the new gold”, “Artificial Intelligence (AI) is like nuclear energy”, “AI will be more revolutionary than electricity”. And we envision a world of unlimited possibilities at our fingertips. We understand that for the success of our company’s transformation, we need data-driven, empowered, inclusive and responsible leadership. But when I advise executive teams on how to transform their companies, I have flashbacks, I see the same irrational responses I have been observing in transformation projects over the last 20 years. Silo mentally, groupthink, power struggles, company politics, lack of accountability, conflicting values systems.

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Some people think I’m exaggerating. They say: “This doesn’t apply to us, to my company, to my executive team.” Well, research published in Harvard Business Review in 2019 reported that the biggest surprise for recently appointed CEOs was how little time they were dedicated to developing business and strategy and how much time they spent managing conflicts, people, and information because they did not have a functional executive team.

They discovered to their surprise that they have a loose group of individuals where they expected to have a team. If you think this only applies to rookie CEOs, in 2008, Fred Adair published research on how CEOs tend to overestimate the effectiveness of their own teams compared to the assessment made by the team members themselves. Most of the time, you wouldn’t know.


Knowledge is not power, it’s a commodity

Today, most people in management positions are baby boomers and generation Xers, but even millennials have been sold the idea that knowledge is power. The problem is, since the internet, knowledge became a commodity. So, what matters for the last twenty years is not knowledge anymore, is knowing how to use that knowledge, available to anyone, to add value to our customers and businesses.

Today, know-how is power, not knowledge. But with the rise of AI, we are seeing something different. Both knowledge and know-how at business level are not differentiators anymore. Successful ideas in business models, knowledge and know-how are shared freely or at low cost with anyone.

Because the capacity of AI to collect and process data is so immense, it opens possibilities of transformation so big that might obliterate current knowledge and know-how. What makes a difference right now is the ability to make sense of the transformation that is happening before anyone else does. Today, sensemaking is power.

With AI, new services in categories will be created to disrupt your market. Either you do it or the competition will. Probably the most accurate word to describe the current challenges is uncertainty. Uncertainty means that there are several possible options, and you don’t know which is going to prevail. Your current knowledge might apply or not, your organization might be fit for the job or not.

You know a lot, you know how to do business in different circumstances, but there are contradictory trends, signals and possibilities. People expect you to know the way forward, to give sharp answers, to design a winning strategy, but uncertainty means you cannot be sure about any of those. With uncertainty we must make a unique sense of the events, exclusive to us and our business. No one can do it for us. When managers are still in the knowledge is power mantra, they will not share data openly, they will not empower and include, they will not foresee the ethical implications of their decisions, they will not make the most of your company’s resources.

AI is not a technical solution

Competitive advantage will not be technical. Technology is available to anyone with resources. Your competitors will have access to the same level of technology. But the readiness of your leadership team to make sense of what happens in the current level of uncertainty is unique to you.

Can you imagine AI applied to your business as a 100% technical solution? Think facial recognition, for example. Can you imagine this tool applied to your services or products as a 100% technical project? I bet you can see legal, ethical, social, political implications as well. It will impact all dimensions of your business; therefore, you need to have them considered upfront.

You must design your business strategy considering these dimensions. For that, you need an effective executive team. To drive AI transformation, we need an effective executive team collaborating to produce business transformation. One of the biggest mistakes we can do with AI is to consider it just another I.T. project. This is not about technology. This is about transforming your business model, processes, strategy and mindset.

I.T. projects tend to have a moderate success level. Between 50 and 80% depending on the international organization reporting it. And the usual reasons are: lack of sponsorship, lack of leadership alignment, and wrong company culture. If we see AI as just another I.T. project it will fail to reap its benefits. We just can’t afford to have AI as a pet project of the CIO or CTO.

AI is a job for the executive team

When I say that AI is a job for the full executive team, it’s not about sponsoring. The executive team must drive AI transformation. The challenge with this is that executive teams tend to be the worst team in company, exactly where you need to have the best one.

It’s told that sometime before 1989, a Soviet Official visiting London was surprised by how efficient the bread distribution was. Wanting to take the chance to improve the bread distribution in the Moscow, he asked an economist that was showing him around: “Who is in charge of London’s bread supply?” The economist thought about different implications of the question and then said “Nobody!”.

A mental model is a representation of reality. It can never be identical to reality because it is influenced by our previous knowledge, assumptions and experience. If you have the mental model that the bread supply of a city is a complex, centralized system controlled by one person, this will determine your business model, your strategy, your organization, your business processes, your leadership style, etc.

We cannot transform business models and processes with AI without first transforming our mental models of how the market operates and successful companies develop business. Transformation depends on the executive team mastering four tools: mental models, critical thinking, sensemaking, and trust.

Mental models to better understand the business landscape and its relations with our actions. Critical thinking to address flaws in our thinking process and get to better decisions. Sensemaking to deal productively with uncertainty. Trust to get things done.

These are not some gimmicks that we follow as a prescription. A winning strategy is the result of a thinking process. Make it biased, acritical, and unable to make sense of uncertainty and you will get bad decisions that will sink your company.

We know it from science: there’s no pure data. Science asks very narrow and frequently out of context questions. Each question is asked separately in an experiment. If you bundle scientific answers to any questions together without critical thinking, systems thinking and awareness of your mental models, the sense you make of the information they provide will be very different according to your individual biases, and so will be the decisions.


Solving the trust issues with AI

As data is biased, data driven insights can become biased as well. There has been increasing concern about gender, racial, ethnic or social status biases of specific algorithms in the market. As with science, it’s all in the questions: What is in the data set? What are the questions being asked? What are the information selection criteria? How to make sense of that information? What is the best way to decide on it?

Biased data creates a trust problem. The current deficit of trust in AI is twofold: trust in the algorithm, and trust in the company’s ethics using it.

Solving the trust issues is a job for c-level. What research shows is that often executives don´t trust each other in the executive team. Think about it, when you are at c-level, these are the people you compete with for budget, resources, exposure, influence. In short, your career depends on you beating them to the CEO job. Whatever it takes – that’s how many see it.

Trust is not abundant in an executive team. So how can such a team generate trust in your organization and what your organization does in the market without solving some internal issues before?

Creating trust in artificial intelligence is a job for natural intelligence. But we have been impairing natural intelligence at c-level because we think linearly, we have unconscious biases, we fail into groupthink, we use irrational criteria to make decisions. We expect AI to correct the flaws in our thinking process, to be able to generate new business models. When in truth, we need to correct the flaws in our thinking process to generate new business models with AI This is the paradox. We need to go beyond business as usual powered by AI.


Beyond business as usual powered by AI
In my latest book, Chief Executive Team, I share research of the last 25 years proving that an effective executive team beats its competition at designing viable strategies for the company, engaging people with its execution and securing competitive advantage in the market. Regardless of business sector or market situation.

Earlier this week, I was speaking to a CEO about resuming the work we were doing with his executive team before lockdown. I asked how things are and he told me that the team is more effective than ever. He was actually questioning how much of the structural work we were doing is still needed. This is what happens in crisis situations: the external enemy brings the team together. Once the adversary disappears, the drive to be an effective team also wanes and we to go back to business as usual.

Research shows that market share gained in crisis situations tends to last long after the crisis is gone. This is the right time to create a new level of thinking to lead your company into your next business model, strategy and organization. This cannot be driven by AI. It is the job of the executive team to create the vision and strategy that will drive your company to achieve it with AI.

If your company is to have a future it must be created by your empowered AI, not the opposite.

Trouble at the Top

Trouble at the Top

Trouble at the Top

Neal Kissel and Patrick Foley interviewed 20 current and former CEOs of large public companies and published their findings in Harvard Business Review online in January 2019.

They found out almost 50% of CEOs said the role was not what they expected beforehand.

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They identified three underestimated challenges:

  1. Newly appointed CEOs stagger under the demands of direct reports. They state they are spending too much energy and time managing their direct reports.
  2. Relationship management across the company, modulating or solving conflicts, and making decisions around conflicts pose a challenge. There are too many silos in the company; teams are fragmented; people don’t think systemically, and a lot of that is about relationship management.
  3. The third challenge that a new CEO faces on the job is information flow. They wonder, “Am I getting the information I need for my people? Is the information I’m giving, the strategy, or the vision, getting to the lower levels of the organization?” This top-down and bottom-up flow of information taxes them.

These are the issues: energy drain, relationship management, and information flow management. CEOs join the position thinking they are going to focus on managing the business. They end up spending most of their energy with executives, direct reports, and their teams and wasting time with the fragmentation of the top team, internal politics, relationship repairing, and information management. They spend less time than they need and want on managing the whole company, business, and overall strategy.

Usually, when I share these insights with CEOs, they highlight one of the things I just said and object by saying, “Yeah, yeah, but those are rookies, recently appointed to the role, so of course, they are inexperienced. They don’t know how things work.”

They usually think, “This doesn’t apply to me, a seasoned CEO.” However, in 2010, researcher Fred Adair found out that usually, CEOs believe their teams are better than the teams themselves think they are. Adair asked CEOs to use criteria to rate the performance of their teams. When the CEOs rated the team performance as a team, they gave a higher rating than when the team answered the same questions. The CEO might say, “On a scale from 0 to 5, with 5 being highest, I’d say my team is a 4.6”. But the team members would say, “No, we are a lousy team. We are a 3.5 at best or more realistically a 3.2.”Usually, the CEO is the last one to know about the problems going on in his or her team. And this is unrelated to how seasoned the CEO is on the job. When you are the alpha animal, others carefully manage the information they give you. After all, they want to influence your decisions to favor their projects, people, and interests. It’s only human to do that. They will not tell you about the realities of conflicts, politics, incompetence, or problems. It’s for the CEO to find out when problems become so bad that results suffer. By then, it is, of course, a bit late.

CEOs tend to live in an information bubble that creates a distorted view of who they are, what they can achieve, and how much they are backed up by their teams. They think that they lead a team, whereas most often they manage a loose group of individuals.

Do companies need executive teams?
Any intelligent and efficiency mindful CEO might ask right now, “I get it; executive teams can be a beautiful thing to have, but do I need to develop one? Can’t I get the same results if I just bring together a group of competent people to get the job done and get on with it? Is it worth the investment of energy, time, resources, mine, and of everybody else to go that way? As you said, CEOs already spend more time and energy to manage relationships than expected. Isn’t this going to drain me even more? What if the conditions are not right? We are under great pressure of time and results; there is a crisis going on, in case you haven’t been around for the last year. How can we afford to do this?

“What about the risks? What if some team members boycott the initiative and I lose face? What if I lose control of the group because I empower them? What if the Board does not agree with this movement? I would lose my credibility just by trying.

“This is micromanagement. I don’t want to go into the team’s areas of responsibility to tell them what to do and not. This action will dilute individual responsibility and get everybody frustrated by my interference. How will I hold the individuals accountable then?

“We don’t need to be friends; we just need to be productive together. Teams are unnecessary at this level; my people are too competent to need them. This is not the way we do things in this company. You will need to convince me to go this way.”

As an organizational consultant, I have heard it all. I could write one full chapter about objections to executive teams and the specific answers to them all. Some of the next chapters go into more detail on how the beliefs and behavior modes of the CEO sometimes prevent the executive group from becoming an effective team and the impact these beliefs and behaviors have on the CEO’s leadership, credibility, and influence. I will also explain in the last chapter why some of the objections of CEOs are groundless.

A chief executive team is not about being friends or diluting responsibility. Nor it is about filling gaps of competence or weakening the CEO position. It’s about getting the company to a different level. It’s a transformation of leadership.

CEOs know this instinctively. We have been implementing teams all over the organizational structure for decades.

  • Self-managed teams are the basis for continuous improvement in manufacturing;
  • project teams are the building block of technical execution;
  • research and development teams are pushing innovation forward;
  • process teams are streamlining the functioning of our companies;
  • customer service teams are redesigning our organizational charts putting clients at the center; and
  • agile teams are doing their stuff all over the place.


Do executives think they can continue to do business with executive teams organized in silos? This is not going to work.

Not only are results are weak when compared with what can be obtained with a fully functioning executive team, but also having a working group at the top sets the worse possible example for a performance-enhancing company culture. Everybody can see it except the executives. It’s the invisible elephant, remember?

Very often, in crises, when risk, resources, and individual competence don’t add up to a solution, CEOs get their direct reports to work as a team to find a way out of the pit. But as soon as the sun shines again, they revert to the standard approach of silo management. It’s a pity that so much potential to produce outstanding results is wasted in regular business situations. These hold the key to business excellence because they allow the time and resources to maximize efficiency while preparing meaningful transformation.

Becoming a team only to help the company out of a crisis is better than nothing. But it leaves most of the money and happiness on the table.

I will not dwell in this line of reasoning for developing executive teams. Instead, I will just give one answer to the question in this chapter and back it up with research. You need to establish a chief executive team because you can’t afford not to do it. Business as usual is draining money, ideas, engagement, and creating the wrong performance culture in your company. To understand this, we just need to look at how the executive team dynamics impact business results.

What’s on a CEO’s mind?
I shared above that, according to Gartner’s CEO and Senior Business Executive Survey of 2019, there are three main concerns in the minds of top executives: growth, digital transformation, and structural development of companies.

To foster growth, you need cash. Investment is essential to have a return on it. You require innovation skills and processes to be able to transform the business digitally. You can’t keep the same business model and expect results to increase, or even to remain the same, under the significant market transformation we are going through. Your company must have engaged people to develop and redesign the company structure and prepare the next generation of leaders. You also need engagement to get your strategy executed and produce the right results.

We will look at the impact of having a real executive team instead of a working group. How does this affect the company’s financial results, innovation, and engagement (the critical dimensions of strategy by CEOs)?

In my book Chief Executive Team, I dive into each of those dimensions, citing only a handful of studies that show the breadth of research done on each topic. You can find a list of references at the end of the book to start reading more.

It’s time for the Chief Executive Team

It’s time for the Chief Executive Team

It’s time for the Chief Executive Team

If you could change the way one team interacts, to make the most impact on the company, which would you choose? The Agile team? The research and development team? The sales team? The marketing team? A special project team? A functional team?

The Executive Team has the power to maximize or destroy the work of any other team in the company, including itself. But top executives don’t consider themselves a team, because usually they don’t function as one.

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Executive teams tend to be the worst team in the company, exactly where you need the best one.

Research of the last twenty years with thousands of companies of all business sectors around the world shows that when you improve the dynamics of the executive team, you impact these key performance indicators of the company: return on assets, return on sales, return on equity, stock performance, profitability, productivity, sales growth, market share, operating result, budget compliance, innovation performance, employee engagement… The list goes on and on.
The results of improving teamwork at the top are too good to miss. But how many companies put their leadership team through a program that improves their effectiveness and efficiency? Very few. It all boils down to one thing: right now, most executive teams leave a lot of money on the table.

This is even more important during a crisis like the one we are facing now. Crisis means you have less time and less resources to recover from bad decisions. During crisis you must make better decisions faster. You are in zero-tolerance zone. You have no margin for error. A Chief Executive Team allows you to make faster and better decisions. This translates into better strategy and more effective execution, producing more results.

Especially in crisis situations, having the thinking power of a team to figure out the best way forward, instead of only one individual, can make a big difference in the amount of information processed, viewpoints considered, options evaluated and problems solved for its effective implementation.

The most damaging myth for leadership effectiveness is “The good CEO knows it all and does it all”. It disengages people all over the company, from the executive level down to the individual contributor. It gets the CEO interfering with everything, either because they think they know better or because they must hide the fact that they don’t know better.

Fixed mindset describes a situation where people believe that theirs and others’ qualities, such as intelligence, talents or competences, are fixed attributes that can’t be changed. If you have a fixed mindset, you will spend more time trying to prove that you know something than learning more about it. You will focus more on what you can already do than on what you can possibly do.

Growth mindset is the opposite. You build on your abilities with a pure desire for learning. You embrace challenges and accept criticism as ways to improve your skills. You find inspiration in others’ success and believe one must put an effort to grow. You team up with others that can add perspective and knowledge to the process of achieving ambitious goals.

The myth that the CEO can know everything that is needed for the success of a company is 100% fixed mindset. It assumes everything stays the same and no-one learns or develops better ways to move forward. It also embeds the assumption that market changes are predictable, therefore it just takes one informed person to figure the right way of dealing with them. A notion that can trigger some good laughs in 2020.

Teams entered the organizational world many decades ago. When we needed something vital done fast, we created project teams. The implementation of self-organized teams in manufacturing improved the quality of products continuously since the 1950’s. Fast forward to today, and teams are ubiquitous in corporate life. They contribute with much of our results, our joy at work and professional identity.

Companies are made, developed, and changed by teams. They are just not managed by one.

Everything changed but the way we manage companies stayed the same. The notion that company leadership is better performed by a chief executive team instead of a chief executive officer can feel very threatening. There is the fear of dilution of accountability, there is the fear of loss of effectiveness, there is the fear of loss of power through “democracy”.

Allow me to be straightforward: we don’t think of loss of accountability and effectiveness in any other team in the company. In fact, as I will prove in this book, executive teams can increase effectiveness and accountability. The reasons for this fear come from the fact that top management teams are unique in the way they are built and operate, and it becomes more difficult to design processes to make them more effective. But we must not shy away from that challenge. When we solve it we reap outstanding benefits.

And no, companies are not democracies and should not become that. You will not read anything like that in this book. Developing and managing an executive team does not weaken the formal power of the CEO. Instead, it creates a bigger type of power that the CEO can use to transform the company: team leadership.

For too long we have been thinking of leadership as an individual characteristic. We crave so much for heroes to save the day that leadership face value is all about CEO individual personality. But the real value of leadership is about Chief Executive Teams transforming companies and leaving a legacy of personal and business growth.

We have the wrong CEO job description. Know-it-all and do-it-all are not success factors. Quite the opposite. It’s time for a transformation of leadership.

The rise of leadership networks

The rise of leadership networks

The rise of leadership networks to deal with the uber-mind

We actually have an idea where we are going from here. Artificial Intelligence is taking over human tasks and increasing the interconnectedness of objects around the world, weaving everything into one bionic information processing entity. We are externalizing our intelligence to an uber-mind of which we are small parts. This is re-shaping the business landscape like a tsunami.
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What we actually don’t know is what kind of part our company, our function and we ourselves will have in this future. Figuring out what to do next in order to secure our companies remain on the playing field is the question plaguing CEO’s as the wave rises. Business as usual does not apply anymore. Centralized leadership is inefficient, centralized strategizing is blind, centralized decision making is slow. The omniscient CEO is doomed.

Leadership will become a property of social networks specifically designed to lead groups and organizations in creating new businesses. Processes currently isolated in separate units will be progressively embedded in these leadership networks to pull the company towards its future. They will create learning loops across functional, geographical, hierarchical boundaries, and erase the difference between internal and external stakeholders.

Companies will have to replicate the systemic functioning of the uber-mind in order to succeed. This requires understanding how leadership networks are created and influenced in order to generate possibilities through the adequate distribution of power, information, support and resources across the organization.

By binding together the maximum diversity of competencies, focusing on a common mission, a leadership network is able to leverage the whole organization to reshape itself and adapt faster to an ever changing environment. That makes the difference to remain relevant as most things go obsolete. Leadership networks engender collective intelligence to deal with the uber-mind. That’s the way to go. Trust the process.

Diet of the Leaders

Diet of the Leaders

Diet of the Leaders

A medical friend who specializes in eating disorders, once commented that most people who go to his clinic need to watch their weight. A sign of a time of unregulated abundance, it seems we tend to put on weight by eating unhealthy food and in excess quantities.
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Not only can his patients identify the problem but often they have the solution for it. In general, they mean a miracle program that if followed allows weight loss with very little effort and in record time.

These poor souls turn up at the doctor’s clinic asking him to validate their choice of diet and to help them follow it. They ask things like, ‘Dr., what do you think of a high protein low carb diet?’ Or ‘Dr., what do you think of me going on a pineapple and green tea diet which is said to help you lose weight?’ Or ‘Dr., I’m excited about Palaeolithic nutrition, what do you reckon?’ Or “Dr., if I become a vegetarian, will I lose weight? ‘

My friend usually listens carefully till the end to the detailed description of the program and then gives an encouraging response: ‘It sounds like a good program. As long as you burn more calories than you consume and you do exercise, that diet will always work. Let’s plan your calorie intake, and the amount of exercise you need to do, shall we?’ No matter what solution they put forward, his response is always the same.

We all like sophisticated programs with appealing theories. Even more so if they come with a good marketing campaign and illustrated leaflets. If there is a book by an international author who is a regular presence on television studios, then it is infallible.

And we tend to forget what is fundamental. We look at simple things with a sort of intellectual arrogant disdain. ‘If it were that simple, anyone could do it.’ The fact is that anyone who really wanted to do it, would be able to. Only those who do not want to do it hide behind conceptual models that withhold the reality of what has to be done.
In my consulting work of developing leaders and management teams I am often faced with a huge thirst for intellectual knowledge, which I consider to be absolutely healthy.

In the executive coaching training courses and sessions that I run it is common for managers to ask me things like: ‘Ricardo, what do you think of the twelve roles model / four styles / six core / seven pillars / ten behaviours / eight habits / five attitudes / three eyes and a navel of leadership? ‘

This is when I remember my friend – the doctor – and cannot resist stealing his line: ‘It is a good model of leadership. If you can increase your team’s engagement, develop your employees’ skills, align their attitudes with the desired company culture and manage performance so as to achieve your objectives, it will always work.’

We can attend conferences and read books with the latest theory about leadership. But only a leader can help his team to produce results. And this depends on holding people accountable for strategic actions, managing their performance appropriately, helping them to develop the skills needed for success, and aligning their attitudes with a competitive corporate culture.

It may seem simple, and for that reason not that appealing, but it is indispensable. With a little determination and humility it can be put into practice and help us produce results. But this is only for those who really want to do it. For the others, there are nice models out there.

* Management Consultant, founder of Plan B Consulting, partner of TMI Portugal, author of the book The Art of Becoming Useless (www.ricardovargas.eu).

(originally published in Executive Digest, April 2009)
By Ricardo Vargas

Faster. Stop controlling.

Faster. Stop controlling.

Faster. Stop controlling.

True speed makes things indistinct. It blurs vision and judgment. Time shrinks. Error margin increases. As we enter a world blurred by speed, decisions need to be made faster with less information. People look at you for answers to problems you never heard of. Leadership stress appears when you stretch the limits.
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What can you do to go faster with your team? Stop controlling them. Control slows you down. As Mario Andretti said: “If everything seems under control, you’re not going fast enough.” You need to renounce control in order to speed up. But how to do it within acceptable risk parameters?
The short answer you have been given is: “Trust your people and they will do it. Just make sure they are competent.” Our research and experience in leadership development over two decades has shown that replacing control with trust per se is not enough to guarantee sustainable top performance and quality levels. We need to replace control with trust in the ability of people to control themselves. It seems a small difference, but it’s not.
You might have competent people that lack the drive and ability to control themselves. To push themselves further and be better. The skills, processes and attitudes required to do something or to steer one’s performance in doing it are different. If you trust people who are only competent in ‘doing’ and not in ‘steering’ their performance, you are in for a surprise.
The challenge is to set up a system that develops your people to the point where you fully trust their ability to do both. It’s not about your control over people and circumstances. It’s about their control over their performance under the circumstances. Even when it’s not world class, if they have the tools and drive, they will improve it. Your job as leader is to develop the people who can accelerate the business and get out of the way. Let them go faster. Stop controlling.

Ricardo Vargas
Consulting House CEO

The empty company

The empty company

The empty company

One possible definition of a company is “an organized set of means to engage in a commercial activity, which produces and sells goods and/or services, in order to respond to the changing market needs.’ In fact, what a company is varies from sector to sector and changes over time.
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What is a company in the Era of Knowledge or in a knowledge-based business sector? If on a Friday there was a fire in your office, destroying the equipment and facilities, what percentage of your business could you count on the following Monday?

In a sector little based on knowledge, you might continue doing business with about four or five percent. The commercial department would probably be able to contact clients to explain what had happened and get their sympathy and understanding. But there would be no product to deliver, no raw material to consume and no machinery to transform it. Without a good insurance policy, few companies would be likely to survive such an ordeal.

In a highly knowledge-driven sector, you would probably be able to continue with 95% of your business. So long as the people who provide the services were not injured in the fire, they would be able to deliver what had been sold on the following Monday.

This is the nature of knowledge-based businesses. They are difficult and time-consuming to develop, but they are more flexible in their implementation and more resilient to natural disasters because they exist mainly in the minds of the workers. Fire is an extreme example, but it would not even have been necessary.

In the age of knowledge, when the workers leave the company at the end of the day, they take with them the bulk of the company’s capital: the know-how; tacit and explicit knowledge; business relationships established with clients over the years; history of problem solving; knowledge of the idiosyncrasies of each of the peers they interact with and how to make the internal relationships work; the behaviour which best promotes the company culture; all unregistered information; technical skills; the ability to work with both equipment and technology; the outcome of training courses and of all investment made in knowledge; the learning acquired from the mistakes made over the years, which were never recorded because they had been corrected; hundreds of different ways of interpreting the available information, the blending of many different points of view; the friendly service we provide our customers; the ambition, the professionalism, the accuracy, the quality and all the attitudes that make us good at what we do; the friendly relationships built; the welcome and social support that sometimes cannot be found anywhere else; the inspiring stories that encourage teams to proceed despite adversity; examples of what cannot be done but looks bad to admit it bluntly; the different groups and their sensitivities that must be respected for the Whole to work in a harmonious way; the accumulated wisdom of the best way to deal with difficult people in general and each boss in particular; respect and credibility gained in the marketplace; the creative response to competitors’ subterfuge; pride felt in being a part of the company and defending the brand; etc.

At the end of the day, when the workers leave, the company is empty. There is only a place left where anything can happen as long as the people who work there return the following day.

(originally published in Executive Digest, August 2010)
By Ricardo Vargas